The Flaws in Identifying Potential

For decades, many employers have focused on identifying high-potential employees—those destined for leadership, the future torchbearers of success. They could be frontline employees with the capacity to become managers of others, or they could be midlevel leaders groomed for the C-suite. Talent development professionals know how critical it is to identify potential leaders and develop their growth for the organization's future.

But what if our entire approach is flawed?

Many companies have systems and processes to detect high potentials and create a bench of future leaders. Traditional methods often rely on static assessments such as performance reviews, past achievements, or expensive 360-degree tools. Each of those methods served an important purpose. But in today's rapidly changing world, where priorities change overnight and employees rarely stay with a company for the long term, those tactics may fail to predict who will thrive in future leadership roles. Yesterday's high potentials are today's exit interviews. Worse, they may distract employers from developing the leaders companies truly need.

Is potential dead?

Three factors demonstrate why classic methods may no longer serve us.

Bias. Biases shape people's perceptions of nearly everything, including who has potential and who doesn't. Managers and leaders often assume someone is a high potential because the individual fits traditional success stereotypes. "If we find ourselves saying ‘they're just so darn charismatic,' it's a signal that, without even knowing it, we may be favoring individuals who fit a familiar profile rather than those with true capability," explains Karina Mangu-Ward, partner at the leadership development consulting firm August Public.

In other words, leaders often unconsciously support individuals with familiar attributes rather than those with capability. The 2024 Organization Science study "Passion Penalizes Women and Advantages Men in High-Potential Designations" reveals that high-potential programs inadvertently favor certain demographics, leading to unequal opportunities and inequality within companies.

Impracticality in dynamic environments. Identifying and grooming high-potential employees over extended periods becomes impractical at the current speed of business. In the modern world, priorities quickly evolve and job tenure is rather short. The US Bureau of Labor Statistics reports that the average tenure of an employee was 3.9 years in January 2024, the lowest since January 2002. Workers aged 25 to 34 averaged less than three years in a position. Today's transient workforce undermines the effectiveness of traditional, long-term development programs.

Outdated proxies for potential. Using antiquated definitions of potential often results in making assumptions based on past or present performance that do not hold up to scrutiny. Multiple studies highlight that current performance isn't always a reliable indicator of future potential, noting that only 20 percent to 30 percent of high performers have the potential to assume high levels of leadership. Further, when they move into those positions, a full 90 percent of high performers have difficulty adjusting to higher levels of responsibility.

Anyone who has worked in the TD industry can point to examples of talented, smart, expert individual contributors getting promotions into management roles in which they have no interest or capability to excel. Those biases prompt leaders to imagine future potential without taking into consideration real future needs.

To make matters worse, companies often sideline formal processes in favor of "I just have a good feeling." Especially as people move up the ranks, executives often choose leaders based on their demonstrations of loyalty or what the executives perceive as willingness to carry out their vision. That encourages passive compliance in high potentials, dampens their true potential, and sends the wrong message to their growing number of direct reports.

If not potential, then what?

Clearly, employers need a new approach. It should focus on current demonstrations of a specific type of mindset, one that is essential for success in today's uncertain and ambiguous world, regardless of what the future may bring: a growth mindset.

Companies that foster a growth mindset see increased innovation, adaptability, and employee engagement. In fact, TalentLMS's Growth Mindset in the Workplace report reveals that 88 percent of executives agree that a growth mindset is important for organizational success, with more than half observing tangible benefits such as higher employee engagement and increased productivity.

In trying to determine your company's next cadre of organizational leaders, watch for ways staff demonstrate a growth mindset. Embed targeted questions into existing performance review processes, manager one-on-ones, and formal talent alignment meetings whose responses help uncover whether an individual demonstrates the behaviors. Learning agility, collaborative leadership, and a desire for growth are three specific behaviors to seek.

Learning agility

Future leaders must be evergreen learners. They must be eager to experiment and learn from success and failure. Learning agility is about being open to new experiences, questioning assumptions, and embracing uncertainty. It involves balancing adaptability with humility, knowing that growth comes from one's personal effort as well as the perspectives of others.

Why it matters. The skills that worked yesterday may not be relevant today. Employees must be able to let go of outdated ideas and embrace new information. They must understand that learning isn't just about gaining knowledge. It's also about knowing when to change direction and learn from everyone else.

What it looks like. Identify individuals who take on unfamiliar challenges, ask questions, and integrate feedback. They are willing to sit in the discomfort of difficult feedback and create a different path forward. They also embrace failure as part of the process while being self-aware of their strengths and areas for growth. Seek out employees with a willingness to adapt and shift course based on new insights, acknowledging that others' experiences and ideas are crucial to finding the best solutions.

What it doesn't look like. High potentials are not the people who stick to the same approaches or areas of expertise, avoid accountability for mistakes, reject feedback, dismiss others' input, and fail to adjust course when necessary.

How to build it in others. Model humility by openly acknowledging learning gaps. Foster an environment where trying new things, failing, and reflecting is part of the journey. Ask "What did you learn this week?" to help others recognize their growth.

Collaborative leadership

Organizations thrive when employees focus on the success of the group rather than their individual achievements. As Michael Koehler, founder of the leadership consulting firm KONU, notes, "Leadership is a team sport, not ‘me me me.'"

Are your high-potential employees willing to subsume their personal success so that the group can succeed? To become future leaders, they will need to.

Why it matters. Empathy may soon be the key differentiator between computers and humans. Emerging leaders need to grasp the complexities of human emotions and be able to see from other people's perspectives. As work becomes increasingly automated, companies need future leaders who understand how people with wildly different backgrounds and life experiences communicate and collaborate. Employers that get that right will thrive; ones that don't will fold.

What it looks like. High potentials seek out diverse perspectives, champion others at their own expense, and speak candidly in service of helping others improve. They also advocate for stakeholders, end users, and customers. Look for staff who recognize and acknowledge biases as well as seek out opportunities to grow.

What it doesn't look like. Being agreeable at the expense of giving honest feedback is not the sign of a high potential. Nor is focusing on novel ideas rather than customer needs. Individuals who take credit for a win rather than recognizing others or who prioritize their personal brand over the success of the business are not demonstrating high potential.

How to build it in others. Establish an environment of psychological safety where people feel safe to share their real thoughts, beliefs, and opinions. Create deliberate learning opportunities for employees to see how different life experiences can shape their reactions, even decades into the future.

Desire for growth

Leadership is a risk. The farther up someone climbs, the less support and protection they have and the farther down they can fall. Leadership is also a sacrifice of one's privacy, time, and personal needs. The focus is no longer on the individual or their strengths but rather their team and its efforts; it's a total inversion of life as an individual contributor. Are the people your company has categorized as high potential up for that challenge?

To assess their desire for growth, you must understand their deeper motivations. Are they vying for the job merely because of the trappings that may come with it, such as more money, greater status, and broader power? Or will they come to work energized by the work itself and the challenges that come with it?

Because everyone has different goals and desires, employers cannot treat employees like interchangeable cogs. Nor can they reshuffle roles and expect everyone to remain happy simply because it makes sense for the organization. Instead, we should identify and nurture high potentials who want to grow and take risks, people who aren't afraid to fall and get back up.

So, what is the path forward?

Revamp identification processes

Even if traditional ideas of potential no longer serve modern workplaces, succession planning and leadership development are as critical as ever. Employers must approach things differently.

Evaluate your tools. How are performance reviews and key performance indicators pointing to demonstrated behaviors? Take a 360-degree view to understand and quantify demonstrations of learning agility and collaborative leadership but with extremely concrete and observation-based metrics. See how you can move tools away from vague questions such as "Does the leader communicate well?" to "Does the leader ask for feedback, listen to the feedback, and change their behavior?"

Rethink who is in the room. Regardless of how data-driven the tools may be, human decisions are messy, and decisions about high potentials often depend on who is involved. Look closely at which voices your company includes or excludes from critical talent decisions. There are many ways to make more merit-based, democratic decisions such as bringing in new voices, documenting and communicating the process, and using secondary evaluations such as 360-degree assessments. No one perfect solution or easy answer exists, but a critical review of informal power and authority is a good place to start.

Take a new approach to development. Cultivate employees' potential. In addition to the traditional focus on building expertise and corporate strategy, consider programs that focus on building growth mindsets, strengthening agility, and learning from failure. How you're developing the people you pick as high potentials matters just as much as whom you're picking.

Invest deeply in psychological safety

Ultimately, the work environment largely influences learning agility, collaborative leadership, and a desire for growth. Psychological safety greases the wheels of a growth mindset, enabling a culture of continuous learning, pivoting, and calculated risk-taking. If people don't feel safe to take risks, they can't demonstrate their learning agility. In fact, your organization is training them out of it. Companies must build a conducive environment.

Inclusion safety. The first step of psychological safety is ensuring all employees feel like they belong, that they are included in organizational decisions and processes. That means taking a hard look at company practices and examining whether people may feel excluded by them. If meetings start with everyone talking about their kids' school activities, how might that feel for the childless employees? Do leaders expect staff to give on-the-spot feedback on a product, not acknowledging that someone may need more time to process information? If workers socialize at the local bar, have you thought about how nondrinking colleagues may feel if they don't partake?

Learner safety. Investigate whether individuals feel safe to learn via risk-taking. What are the consequences if someone takes on a new project and fails? What is the decision-making process to embark on something new? When do employees get new opportunities—when they've already proven that they can do it, or when they ask to take on new challenges?

Contributor safety. Once workers feel safe to learn, they can contribute. But is it safe to contribute? In other words, can they share new ideas without fearing rejection or humiliation? Can they be creative regardless of position, title, or tenure? Do leaders solicit input from everyone or only a small, trusted group?

Challenger safety. This is the hardest and most important stage of psychological safety. It is when people feel safe to challenge the status quo and raise objections. Can employees criticize popular ideas? Does the company welcome or discourage dissent? Can staff raise potential challenges, or does groupthink prevail?

Take responsibility for your own role in the system

Regardless of whether someone is the CEO or a new hire in the mail room, many aspects of cultivating potential are outside of an employer's control. You can't control someone's desire for growth, timing of stretch opportunities, or others' perceptions of an individual. In addition, some matters such as psychological safety are never 100 percent controllable by any individual.

And yet, from wherever an employee sits, they can take actions to create an environment conducive to growth. Reflect on your own biases and how they affect who you label as high potential. Taking a pause and asking yourself "Why am I drawn to this individual?" can help you identify unconscious biases and offer more objective ratings and evaluations.

Uplift the voices of employees who fly under the radar. Recognizing others for exceptional work matters and can often shift the dialogue on people who may not fit the cultural mold.

Bring other voices into the rooms where you hold influence. Although sharing that power may initially feel like a trade-off, over time, it builds collective strength by ensuring that everyone feels heard and valued.

Commit to helping others build learning agility, collaborative leadership, and collective growth—whether as their manager, their peer, or their direct report—through candid feedback, encouragement, coaching, and support.

Nobody can predict the future. Nor can anyone predict every skill tomorrow's leaders will need. But that's precisely why learning agility, collaborative leadership, and a desire for growth are so critical. Regardless of what challenges tomorrow brings, that trifecta enables emerging leaders to succeed.